The Historical Origins of Regional Economic Inequality in Spain: The Cultural Legacy of Political Institutions

Abstract

This chapter delves into the role of historical institutions and culture in current regional economic inequality in Spain. It starts from the theoretical basis that there exist certain cultural traits that are associated with a better economic performance within a liberal institutional framework—generalized trust, orientation toward political issues, associative participation, attitudes toward individual independence, etc. are highly persistent and were partly shaped by political experiences in the distant past. With regard to the relevant historical facts that could have led to the promotion of these cultural traits, this study relies on two different but related works: Tabellini (Journal of the European Economic Association, 8(4), 677–716, 2010) and Guiso et al. (Journal of the European Economic Association, 6(2–3), 295–320, 2008). Specifically, two historical political aspects that vary regionally are considered: the type of political institutions in the Early Modern Age and the level of local autonomy in the High Middle Ages. The former is measured by the political constraints on the executive within the period 1600–1850 and the latter by the level of autonomy in the formation process of the local legal order between the eleventh and fifteenth centuries. This work empirically tests this causal argumentation that relates past political institutions to current regional economic distribution through this cultural legacy. The results support this hypothesis and are robust even against other so-called fundamental causes of development such as geography and human capital.

Keywords

Social Capital Instrumental Variable Generalize Trust Legal Order Autonomous Community

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